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In response to a congressional request, GAO reviewed selected activities at the Hawthorne Army Ammunition Plant, which the Army converted to a contractor-operated plant, to assess: (1) the cost savings and personnel reductions expected from the conversion; (2) contractor performance problems after the conversion; (3) the Army's monitoring of contractor performance and costs; and (4) the procedures for deciding when to recompete and what to expect in future conversions.

GAO found that: (1) it was unable to determine whether the Army achieved the estimated cost savings and personnel reductions because the work load was changed after conversion; (2) although the contractor initially experienced operational problems because of poor planning and personnel inefficiencies, its performance steadily improved; (3) because of conversion transition problems, the Army improved its procedural guidelines for conversion and developed standard operating procedures for its plants; and (4) because the Army monitors the contractor's performance and costs, it would recompete the contract or return the plant to government operations if it determined that contractor costs were too high or performance was unsatisfactory.